In our International Markets, our global scale and broad portfolio give us a significant
competitive advantage over local competitors, allowing us to optimize our offerings through a combination of high quality medicines and unique
go-to-market
approaches.
Furthermore, in significant markets such as France, Japan and Russia, governments have issued or are in process of issuing regulations
designed to increase generic penetration. Specifically, in Japan, ongoing regulatory pricing reductions and generic competition to
off-patented
products have negatively affected our sales in Japan. These
conditions result in intense competition in the generic market, with generic companies competing for advantage based on pricing, time to market, reputation and customer service.
Our specialty medicines business faces intense competition from both specialty and generic pharmaceutical companies. The specialty business
may continue to be affected by price reforms and changes in the political landscape, following recent public debate in the United States. We believe that our primary competitive advantages include our commercial marketing teams, global R&D
capabilities, the body of scientific evidence substantiating the safety and efficacy of our various medicines, our patient-centric solutions, physician and patient experience with our medicines and our medical capabilities, which are tailored to our
product offerings, regional and local markets and the needs of our stakeholders.
Regulation
United States
Food and Drug
Administration and the Drug Enforcement Administration
All pharmaceutical manufacturers selling products in the United States are
subject to extensive regulation by the United States federal government, principally by the FDA and the Drug Enforcement Administration (DEA), and, to a lesser extent, by state and local governments. The Federal Food, Drug, and Cosmetic
Act, the Controlled Substances Act (CSA) and other federal and state statutes and regulations govern or influence the development, manufacture, testing, safety, efficacy, labeling, approval, storage, distribution, recordkeeping,
advertising, promotion, sale, import and export of our products. Our facilities are periodically inspected by the FDA, which has extensive enforcement powers over the activities of pharmaceutical manufacturers. Noncompliance with applicable
requirements may result in fines, criminal penalties, civil injunction against shipment of products, recall and seizure of products, total or partial suspension of production, sale or import of products, refusal of the government to enter into
supply contracts or to approve NDAs, ANDAs or biologics license applications (BLAs) and criminal prosecution by the Department of Justice. The FDA also has the authority to deny or revoke approvals of marketing applications and the power
to halt the operations of
non-complying
manufacturers. Any failure to comply with applicable FDA policies and regulations could have a material adverse effect on our operations.
FDA approval is required before any new drug (including generic versions of previously approved drugs) may be marketed, including
new strengths, dosage forms and formulations of previously approved drugs. Applications for FDA approval must contain information relating to bioequivalence (for generics), safety, toxicity and efficacy (for new drugs), product formulation, raw
material suppliers, stability, manufacturing processes, packaging, labeling and quality control. FDA procedures generally require that commercial manufacturing equipment be used to produce test batches for FDA approval. The FDA also requires
validation of manufacturing processes so that a company may market new products. The FDA conducts
pre-approval
and post-approval reviews and plant inspections to implement these requirements.
The federal CSA and its implementing regulations establish a closed system of controlled substance distribution for legitimate handlers. The
CSA imposes registration, security, recordkeeping and reporting, storage, manufacturing, distribution, importation and other requirements upon legitimate handlers under the oversight of the DEA. The DEA categorizes controlled substances into one of
five schedulesSchedule I, II, III, IV, or Vwith varying qualifications for listing in each schedule. Facilities that manufacture, distribute, conduct
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